China: Inquired Price of Silico Manganese by Steel Mills Vastly Reduced
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The inquiry price of silico manganese in the second round of procurement in December by a large steel mill in North China was announced at RMB 8,700/MT with purchasing quantity of 19,990 MT, which is RMB 250/MT lower than the first round purchase.
This also shows the intention of winter storage by steel mills. The wait-and-see atmosphere in the market is all pervasive, and the overall operation is still weak. The price of silico manganese 65-17 by main producing areas is mostly at RMB 8,200-8,400 /MT. The alloy index shows that the price of silico manganese 65-17 is relatively stable. Among them, the price in provinces such as Henan, Hebei, Shandong, Jiangsu etc was at RMB 8,575-8,836/MT (delivered, cash including tax).
Affected by the downturn of second round purchase price (the first round at RMB 8,950/MT) by the iconic steel mills, the willingness to seek more shipment is on the rise in the silico manganese market. Although most of the alloy factories are still in the middle of order commitment, with low inventory levels and high cost, it is inevitable that some small scaled plant under capital constraints choose to be more flexible by giving discounts and subsequently drag down the main market.
Specifically, although the northern region holds some stock, the quantity is not large, plus the power limit in Inner Mongolia region, output is somewhat restricted. The producers in the south are facing heavier costs and the orders are tight. However, alloy plants have little motivation under the principle of buying in the uptick moment while leaving in downward trend.
Futures Market
In the futures market, the silico manganese contract 1901 was dominated by the shock consolidation today. The all-day market was mainly around the average price line. Opening at 8,430, the highest at 8,482, the lowest at 8,354, closing at 8,448, and settlement at 8,434, an increase of 0.05% (4 points). The number of positions was 117,976 lots, and the trading volume was basically the same as that of the previous trading day, and positions reduced is 7,392 lots.
Manganese Ore
As far as the manganese ore market is concerned, the price of manganese ore at the port has not much changed from last week. The mainstream price of Australian lump 46% at Tianjin Port is RMB 64-65/dmtu, the SA semi-carbonate is RMB 55-56/dmtu, and the Gabonese ore 44% is RMB 61-62/dmtu. At Qingzhou port, the Australian lump 46% is at RMB 63-64/dmtu, SA semi-carbonate is at RMB 56-57 / dmtu, Gabonese 44% at RMB61/ dmtu.
As there is no apparent improved demand release for port ores, a small number of traders resort to sell at low price due to capital pressure while downstream confidence is insufficient and buyers and sellers are in a deadlock amid strong wait-and-see sentiments. It is expected that in the short term, manganese ore market may continue to operate under pressure.
Future Outlook
In view of the significantly squeezed profit margin of the downstream steel market, and the pass-on of pressure to the upstream Alloy producers, the spot market price of silico manganese may still be subject to negative forces. But, as there is low inventory of silico manganese and the winter storage needs of steel mills still provide certain support for the price. All in all, it is expected that Silico manganese prices may continue to be weak, but it is unlikely to see a sharp fall.
